diff --git a/src/hydrogen.cc b/src/hydrogen.cc
index 468de1eee4..8570b33ce0 100644
--- a/src/hydrogen.cc
+++ b/src/hydrogen.cc
@@ -4573,11 +4573,11 @@ void HOptimizedGraphBuilder::VisitBlock(Block* stmt) {
       HInstruction* inner_context = Add<HAllocateBlockContext>(
           outer_context, function, scope->GetScopeInfo());
       HInstruction* instr = Add<HStoreFrameContext>(inner_context);
+      set_scope(scope);
+      environment()->BindContext(inner_context);
       if (instr->HasObservableSideEffects()) {
         AddSimulate(stmt->EntryId(), REMOVABLE_SIMULATE);
       }
-      set_scope(scope);
-      environment()->BindContext(inner_context);
       VisitDeclarations(scope->declarations());
       AddSimulate(stmt->DeclsId(), REMOVABLE_SIMULATE);
     }
@@ -4591,10 +4591,10 @@ void HOptimizedGraphBuilder::VisitBlock(Block* stmt) {
         HObjectAccess::ForContextSlot(Context::PREVIOUS_INDEX));
 
     HInstruction* instr = Add<HStoreFrameContext>(outer_context);
+    environment()->BindContext(outer_context);
     if (instr->HasObservableSideEffects()) {
       AddSimulate(stmt->ExitId(), REMOVABLE_SIMULATE);
     }
-    environment()->BindContext(outer_context);
   }
   HBasicBlock* break_block = break_info.break_block();
   if (break_block != NULL) {
diff --git a/test/mjsunit/harmony/regress/regress-3741.js b/test/mjsunit/harmony/regress/regress-3741.js
new file mode 100644
index 0000000000..8a9dd9e09c
--- /dev/null
+++ b/test/mjsunit/harmony/regress/regress-3741.js
@@ -0,0 +1,26 @@
+// Copyright 2014 the V8 project authors. All rights reserved.
+// Use of this source code is governed by a BSD-style license that can be
+// found in the LICENSE file.
+//
+// Flags: --harmony-scoping --allow-natives-syntax
+'use strict';
+function f24(deopt) {
+  let x = 1;
+  {
+    let x = 2;
+    {
+      let x = 3;
+      assertEquals(3, x);
+    }
+    deopt + 1;
+    assertEquals(2, x);
+  }
+  assertEquals(1, x);
+}
+
+
+for (var j = 0; j < 10; ++j) {
+  f24(12);
+}
+%OptimizeFunctionOnNextCall(f24);
+f24({});